Page One
The force is with the stock market this morning. Specifically, Dow component and AI play, Salesforce (CRM), is up 12% following its earnings report, outlook, and commentary about the prospects for its Agentforce AI system for enterprises. The latter has been the key driver for the stock, which is having an outsized influence on the equity futures trade.
Currently, the S&P 500 futures are up 21 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 163 points and are trading 0.8% above fair value, and the Dow Jones Industrial Average futures are up 188 points and are trading 0.4% above fair value.
Good results and guidance from other companies, such as Okta (OKTA), Pure Storage (PSTG), and Dollar Tree Stores (DLTR), have also been underpinning factors along with an ADP Employment Change Report for November that hit the sweet spot of being neither too cold nor too hot.
According to ADP, private-sector payrolls increased by 146,000 in November (Briefing.com consensus 170,000) following a downwardly revised 184,000 (from 233,000) in October. The vast majority of the gains were seen in the service-providing sector (140,000) and occurred mostly at large establishments (120,000).
Year-over-year pay gains for job stayers increased for the first time in 25 months to 4.8% while year-over-year pay gains for job-changers jumped to 7.2%. Those are good results for consumer spending prospects, although they may not be the best sign for policy makers trying to bring aggregate inflation down to 2.0%.
Treasury yields are higher this morning, but it is important to note that the pop in yields preceded the ADP report. Accordingly, one can't pin the weakness in the Treasury market on the ADP data. There isn't a pinpoint explanation for the weakness either, which comes on the heels of a strong rally that caught many participants expecting higher yields offsides.
The 2-yr note yield is up three basis points to 4.20% and the 10-yr note yield is up five basis points to 4.27%.
The economic calendar, which includes the final November S&P Global US Services PMI (prior 55.0) at 9:45 a.m. ET, the November ISM Services PMI (Briefing.com consensus 55.5%; prior 56.0%) at 10:00 a.m. ET, and the Fed's Beige Book at 2:00 p.m. ET, will provide some additional trading fodder for the Treasury market. The same goes for Fed Chair Powell's involvement in a moderated discussion at 1:40 p.m. ET at the New York Times DealBook Summit.
The stock market will keep an eye on Treasuries as well, but for now its focus is on the good vibes flowing out of Salesforce's earnings report and commentary, indices that won't yield much at all to selling interest, and the intangibles (i.e., seasonality, momentum, fear of missing out) that continue to drive tangible gains for investors.
